Netcare was founded back in 1994 and later in December 1996, it got a listing on the Johannesburg Stock Exchange. At the time, Netcare comprised of six hospitals. After the listing, Netcare acquired a number of small and autonomous hospital holdings in South Africa including Excel Medical Limited and Clinic Holdings.
It later acquired Medicross, which had a network of 75 dental and medical centers athwart South Africa in 2001. Medicross acquired another holding, Prime Cure in 2006 that had 25 medical centers and a 130,000-customer base.
Reasons for Netcare’s success in South Africa
From its history, one of the main reasons behind Netcare’s success is its series of acquisitions. After its listing in the Stock Exchange, it acquired very organized holdings with large networks in South Africa’s health system. These acquisitions enabled Netcare gain customers and control many clinics.
This was coupled with organizational growth that saw Netcare expand the existing hospitals as well as building new hospitals in which four were completed in 2006. It also earned huge contracts for its 911 emergency along with the ambulance service.
It also took advantage of budding markets by offering high volume and low cost service to the private patients who were unable to pay for conventional private hospital contribution previously. Netcare’s record growth was so strong that by the year 2007, it boasted of 18,877 employees.
In the same period, its capacity had grown to 9,546 beds in 56 hospitals with 86 hospital and retail pharmacies and 358 operating theaters in a private hospital that offered trauma services. Its 911 emergency service comprised over 7.5 million members with 246 ambulances and response vehicles, as well as 3 helicopters over and above 2 fixed-wing ambulances.
Another reason for success is the operational excellence by driving efficiencies and controlling costs by means that could not compromise quality. It also implemented a system of Systems Application and Products (SAP), the endorsement of the entire hospitals in addition to an effort to put into practice shared-service centers.
Netcare focused on creating and maintaining traditions of excellence at all levels of operations. This has also been achieved through heavy investments made in facilities, technology as well as doctor and nursing training. After this move, Netcare attracted extra 162 medical experts in 2007.
This was further enhanced by the entry of a new CEO who brought many changes in terms of administration and governance. Friedland appreciated the government as a key stakeholder in the health industry and government’s regulations greatly affect profit making. He therefore, meant efforts to enhance relationships with the government.
Netcare derived a lot of success from looking into foreign markets through international expansion. Netcare did not hesitate to look at markets outside South Africa and create the brand in these nations. A case in study is Netcare’s entry into the UK market in which Netcare has repatriated many benefits.
This portrayed Netcare as a company that was keen to take advantage of any opportunities that it saw in the international market. It used its proficient skills developed back in South Africa as an upper hand to secure tenders in the UK with the NHS.
These contracts have been very instrumental in increasing the net worth of Netcare as it had offered reputable and quality health-care to over 10,000 patients by 2006. This Netcare’s success could be attributed to innovativeness and risk taking ability.
They were daring to initiate ophthalmic units that were mobile and could operate from different locations and offer services like surgery, post, and pre-operative care. It has also displayed its innovativeness in developing factory services to obtain economies of scale by setting up a huge number of related operations jointly.
Netcare undoubtedly built a name in terms of best and safe healthcare. It also boasted of passionate professionals who were friendly to the patients. Netcare human resource was a strategy that they well utilized to attract many customers.
As other hospitals in South Africa were keen hunting doctors who had fled through brain drain, Netcare strategized itself as the employer of choice. It embarked on attracting and retaining skilled nurses as well as, training workers and nursing students to avert shortage of skills.
It initiated a clinical governance plan that well described clinical pathways that ensured safety of patient care. It also had its guidelines that looked into infection control, trauma, and ICU. Consequently, it had the lowest infection in South African hospitals. This saw an outburst in clients, for example, between 2006 and 2007 their admissions increased by one million (5.9%) and primary care visits by 3.6 million (9.4%).
Type(s) of competitive advantage that Netcare had in South Africa
Netcare has various types of competitive advantage in South Africa. One of them is cost leadership or lower costs with benefit. Netcare has managed to improve the quality of healthcare without compromising on the quality. It has also enabled many private patients to gain access to traditional private hospital which they could not afford before.
Another comparative advantage comes from strategic relationships. This has been acquired through good relations with the government and its major acquisitions with independent hospital groups since 2005. This has gained more customers and attracted reputable doctors reducing the effect of brain drain.
Netcare has also gained quality and first mover position as one of the comparative advantages. It offers quality services, largest and efficient 911 emergency services, and ancillary health-care with logistical infrastructure. It has also gained very high ratings on BEE commitment.
Delivery advantage is another comparative advantage gained by Netcare. This is in both speed and reliability of the services offered. It has well equipped ICU and the largest emergency service, so customers are assured of speed in service delivery. It also has a large number of nurses, doctors, and paramedics who are well trained. Its services are reputable and timely. Netcare also boasts of skilled and friendly staffs that make customers very comfortable.
Differentiation advantage is another type of comparative advantage gained by Netcare since it has specialized in various medical conditions. Netcare is well proficient in various fields like trauma, pediatric trauma, neo-natal, oncology, eye operations, and various types of surgeries. This has also enhanced cost advantages as many operations can be done under the same unit. On the same note, the 55 private hospitals have well entrenched its impact in the market.
Competencies that Netcare acquired in South Africa transferable to other markets
Netcare has acquired a number of competencies that can be effectively transferred to other markets. One of the key competencies is organizational growth that has seen Netcare utilize the expertise in the market to break through both the private and the public health markets.
It has quickly asserted its force in the market by expanding the acquired hospitals and constructing new ones, as well as expanding its emergency service to be the leader. Notably this has been done at low cost, high volume and quality service.
Another competence that can be transferred to other markets is the provision of excellent care using the most sophisticated and modern technology and hospital networks. Netcare has established several centers of excellence with modern facilities, which are offering quality health-care. Through these facilities, it has created one of the most efficient trauma services in the world. It also has very sophisticated facilities for dealing with breast cancer particularly at Milpark hospital.
Netcare has gained competence in operation at low cost but maintaining the quality of health-care service. Operational excellence tops their list. It has succeeded in training nurses and doctors, as well as investing in facilities and technology. Netcare has a reputation of practicing the safest and best health-care.
It has a clinical governance line up that describes clinical pathways. It has also stipulated its private guidelines on ICU, trauma, and infection control. It has the lowest infection rates in South Africa. Additionally, it has also improved its policies and new standards in their position to maintain the best private healthcare.
To cap it all, one of the most remarkable competencies is quality. This is maintained in terms of skills and knowledge of the medical experts, facilities, and safety, hygiene, and health outcomes. Netcare has built a name in the world in terms of trauma services, breast cancer, emergency services, neo-natal, oncology and general patient care.
A lot of investment has been directed towards acquiring the newest technology to treat various diseases for example electrophysiology system and the “stereotactic Niobe electrophysiology catherisation laboratory”. After all, Netcare’s aim is to provide quality healthcare all over the world.
Pros and cons Netcare had for expanding internationally or exploiting opportunities at home
In 2008, Netcare had the options of expanding internationally or exploiting opportunities in South Africa, which have both advantages and disadvantages. Expanding internationally provides good opportunities for Netcare as it presents infrastructure, purchasing power, an efficient management team, property and facilities, local connections and most importantly enable Netcare build its brand on an excellence podium outside south Africa.
Netcare’s entry into UK market through GHG was marked by success and global recognition. Netcare has also had opportunities to invest in other African countries. However, the nature of these economies poses a big challenge.
The insured population and government’s participation in healthcare are key considerations. Netcare must also overcome many challenges in order to gain competitive advantage that will enable to penetrate and succeed in emerging markets.
There is also a likelihood of straining resources when Netcare wants to be present in every continent. International expansion is more likely to be looked at as lack of commitment to provide quality health-care back home and exposure to foreign debt.
Expanding opportunities available in South Africa is also a good option since Netcare brand is well established in South Africa. It has created brand loyalty and Netcare knows the market’s strengths and weaknesses.
However, the market does not offer more opportunities for growth. For instance, Netcare has to content with the shortage of medical skills that have griped South Africa for the longest time. Another challenge that faces Netcare’s if it chooses to exploit opportunities at home alone is the recent legislation by the parliament that could greatly affect its strategy. More acquisitions in South Africa will be subject to rigorous examination from competition regulators.